Mutuals Industry Review 2017 | KPMG | AU
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Mutuals Industry Review 2017

Mutuals Industry Review 2017

KPMG's Mutuals Industry Review 2017 highlights that Australia's mutual banks, building societies and credit unions (the ‘mutuals') performed soundly in 2017 despite low interest rates, increased competition, fluctuating property prices, threats from technology and heightened regulatory and compliance demands. This environment is by no means new and has in fact become the ‘new normal’.

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National Sector Leader, Mutual Banks

KPMG Australia

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The balance sheets of mutuals strengthened this year with net asset growth of 6.8 percent. However, profitability metrics were down with $605.7 million profit before tax reported for the year, a decrease of 4.3 percent on 2016.

Key highlights from the report

  • Residential lending increased by 9.8 percent (2016: 9.8 percent)
  • Deposits increased by 10.5 percent (2016: 7.9 percent)
  • Technology spend increased by 12.4 percent (2016: 11.7 percent)
  • Net interest income grew by 3.4 percent (2016: 5.8 percent)
  • Non-interest income increased by 1.2 percent (2016: fell 5.0 percent)
  • Net interest margin declined by 11 bps to 2.03 percent (2016: declined by 4bps to 2.14 percent)
  • Impairment provisions remained steady at 0.07 percent of average gross receivables (2016: 0.07 percent)
  • Capital levels fell by 30bps to 17.2 percent (2016: 17.5 percent).

Key themes

The survey has also highlighted 8 current and emerging topics on the radar:
  1. Capital – finding the equilibrium between generating sufficient profit to support growth and maintaining adequate buffers to minimise the effect of financial shocks. 
  2. Gen Y – understanding this demographic’s priorities, spending habits, and product and service expectations to offer relevant and competitive choice.
  3. Mobile banking – investing in new forms of mobile banking and payments as we move more and more towards a cashless society.
  4. New Payments Platform – embracing product innovation and enhancing the customer experience through avenues such as real-time payments.
  5. Fintech – using organisational size and nimbleness as an advantage to provide both enabling and disruptive technology solutions.
  6. Digital labour – streamlining business processes and reducing operating costs by automating and augmenting work performed by humans.
  7. Regulatory and accounting changes – preparing for the impacts of the Banking Executive Accountability Regime (BEAR), AASB 9 Financial Instruments and tax matters on the horizon.
  8. Risk management – understanding the interconnectedness of risk, and ensuring it is managed in a way so that the brand, reputation and purpose of the mutuals are preserved.

Further information

Podcasts

Listen to KPMG’s Mutuals Industry Review 2017 podcasts which provides highlights of the 2017 results and further insight into industry issues. KPMG interviewed three CEOs from large mutuals to reflect on how they’ve seen mutuals transform over the last 30 years and provide perspective on what they consider to be the opportunities and challenges facing the industry now and going forward.

Mutuals Industry Review

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